The Ohio Manufacturers’ Association (OMA), together with the Cleveland-Cuyahoga County Port Authority, the Toledo-Lucas County Port Authority and the Summit County Port Authority (collectively, the Port Authorities), are working together to offer manufacturing companies fixed-rate, long-term financing for equipment and new facilities through economic development lending programs offered by each of the Port Authorities. The lending programs are known as “Bond Fund” programs, because bonds are issued to provide funds for the loans. Each of the respective Port Authorities received an additional infusion of capital to its reserves for these lending programs, which now allows for additional loans being made to manufacturers.

This infusion of capital was provided through an agreement among FirstEnergy’s Ohio utilities—Ohio Edison, Cleveland Electric Illuminating Company and Toledo Edison (collectively, the FE Companies), the OMA and the Port Authorities. The FE Companies are contributing $7.5 million in the aggregate to the reserves for the respective Bond Fund programs to support manufacturing and related energy-efficiency projects financed by the Port Authorities. Under the agreement, the FE Companies agreed in 2009 to provide a total of $2.5 million per year to the Port Authorities to support loans to projects designated by the OMA and the Port Authorities, and they have already made $5 million in contributions.

Bond Fund programs can be attractive to manufacturers for the following reasons:

  • Bond Fund program lending provides an alternative to traditional bank financing
  • Bond Fund programs offer access to capital markets based on the programs’ BBB “investment grade” credit rating
  • Bond Fund programs generally are able to offer long-term, fixed-rate (and typically lower-interest rate) loans to manufacturing companies for qualifying projects, including facility construction and expansion, equipment acquisition and energy efficiency expenditures
  • The loan terms typically require monthly loan repayments and a 10 percent “reserve fund” deposit, which can be borrowed or provided with a letter of credit.

Manufacturers may be eligible for a Bond Fund program loan if:

  • The manufacturer is a customer of one of the FE Companies
  • The manufacturer is a member of the OMA
  • The financing involves at least $1 million in capital investments
  • The financed project represents a new electrical load of at least 100 kilowatts
  • The manufacturer meets the commercially reasonable financial criteria of the Port Authorities and the Bond Fund programs.

Finally, if the project being financed represents a core manufacturing activity, really low-interest rates—one- to two-percent lower—are available because of the ability of the Ports to issue “qualified small issue” tax-exempt manufacturing bonds—which translates into a lower rate loan.